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How do you choose where to invest your super?

Once your money is in super, there’s even more you can do with it. Making your own investment choices can help your super balance, and your confidence, grow faster.    

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Narrowing down the options

Getting started with investing can be confusing. Gen from the IOOF team explains why choosing super investments is a good place to start.

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How investment choices can help

When you join a super fund, if you don’t choose how to invest your super, any savings you already have, and any new payments into your account will be invested in a default investment called a MySuper investment.  

This investment might be ideal for your life stage and the type of investments you feel comfortable with. But most super funds offer a whole range of investment options and there might be one that’s a much more appropriate choice for getting the most from your super savings. 

Our MySuper investment is designed to grow your retirement savings. If you’d like more control, you can change investments at any time through your online account. Choose from our wide range of managed funds, shares or fixed-term investments. 

How do you choose?

If you’ve never invested before, choosing super investments can seem a bit daunting. You probably know that some kinds of popular investments – like shares on the stock exchange – can go down in value, sometimes by quite a lot. At the same time these types of investments also come with better opportunities to grow your wealth faster at a higher risk. 

You can find out more about these different types of investment options in our next topic What investment options are available? But first, let’s look at three things you need to think about when comparing these options and making choices for your super:

Making sure you’re getting the most out of your money is always important. If someone offers you an extra $10,000 you’re not likely to turn it down. But when it comes to making investment choices in super, you can be a lot clearer on the best options for you if you know just how much your super needs to grow between now and when you retire. That way you can narrow down your choices to the ones with the potential to earn the return you need to get your balance to where it needs to be. 

This is why it’s important to find out how much super you have and how much is enough for a comfortable retirement before choosing your investment options with the appropriate level of risk involved. Of course, you don’t have to rely only on investments to reach your super balance goal for retirement, or you may not be comfortable with the amount of risk you need to take to get there. You can also make extra payments into super to help your balance grow faster.

We’ll be talking more about risk later in this topic. But, If you’re more than 10 or 20 years away from retirement, you might consider growth investment options for your super that come with bigger potential returns but also a higher risk of making a loss from time to time. 

As long as there’s a good chance of those investments bouncing back by the time you access your super, then a period of losses isn’t really a problem for you. And as you get close to retirement, you can look at switching to defensive, lower risk investment options. This can give you peace of mind that your super balance won’t be going backwards when you’ll be needing it to pay your bills in a few years’ time. That’s not to say that you should not invest in growth assets during retirement – your retirement may last decades so some growth may be needed. But reviewing your investments as you approach retirement is important. 

“Whether the value of your super investments has grown by 10 per cent one year or fallen five per cent the next isn’t really relevant. Of course, it doesn’t make you too comfortable to see a few thousand dollars wiped off your balance. But if your super is locked away for the next 20 years and your investment grows 20% overall during that time, then the negative returns don’t really matter. It’s only when you need to access that money during a period of losses that these downs become as important as the ups.” 

To get comfortable with making choices for your super investments, it helps a lot if you’re well informed about your options. For some of us, the pros and cons of different types of investments isn’t the most riveting topic and we’d rather leave it to the experts. If this is you, you might be happier to leave investment choices up to your super fund and keep your money in their default option. Or you can speak to one of our team who can talk to you about ways to get help from a professional with your investment choices in super.

Maybe you do know a little about investing already or you’re keen to wade in and explore what your investment options in super are all about. If you are, then have a look at our next topic, What investment options are available? to get you started with making your own investment choices in super. 

What’s your risk profile?

These three factors are a good starting point for making your own investment choices in super. But there’s a lot more to both the practical and more personal sides of making investment choices. There are of lots inputs into what we call your risk profile – from your life stage, to your investment timeframe, to how comfortable you are with having a little more uncertainty in your financial future. Put all this together and you get a much better picture of what investment options are likely to suit you best.

Some of the things that make up your risk profile:

  1. How comfortable you are taking risks
    When you’re someone that actually enjoys taking a chance in your choices, higher-risk investment options could be just what you need. But research shows that a lot of people are really troubled by the idea of their investments going down in value. 

    As a test, ask yourself how you would feel if you woke up and the value of your investment had fallen by 10 per cent or 20 per cent?

  2. Financial capacity to take risk
    Your financial commitments and income can impact your capacity for taking risks. If you have a new baby and a mortgage you have a lot more to juggle in your life and finances compared with a single person with no debts to service.

  3. Do you need to take risk?
    This all comes down to your goals. When you’re 30 years old you’ve got a long way to go to reach your savings goal for retirement. Maybe you can be more comfortable accepting greater risk – and some short-term plunges in your super balance – to achieve your target. If you’re close to retiring, on the other hand, you don’t have the luxury of time to recover from a loss in your super.

Get help with making investment choices

Being a little cautious about making investment choices with your super is really natural. It’s a lot of your money and really important to your future. If you’d like to get some help with deciding on the right type of investments, we’re here for you.


Your risk profile can help you decide ...

Did you know?

Your super balance will be invested somehow, whatever choice you make. Your risk profile helps you decide which options suit you best and what level of risk you’re comfortable with. 


Important things to consider when making super investment choices are ...

Did you know?

Your risk profile comes from lots of things. Everything on this list – plus others like how much you already know about investing – are important to making the best super investment choices.  

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